Dendreon Cuts 25% of Jobs After Slow Start to Provenge Sales

By Ryan Flinn -
Sep 9, 2011

Dendreon Corp. (DNDN), maker of the
prostate-cancer drug Provenge, is cutting its workforce 25
percent in a restructuring effort to reduce costs and offset
slower-than-anticipated sales of its only product.

The pace of sales for the cancer drug prompted the Seattle-based company last month to withdraw its 2011 revenue estimate
of $350 million to $400 million. Dendreon announced yesterday it
had fired 500 workers, a move that would save $120 million
annually.

Provenge, the first U.S. approved therapy that trains the
body’s immune system to attack cancer cells as if they were a
virus, is a $93,000 treatment. The cost, and concern by doctors
that they may not be reimbursed quickly, led some physicians to
avoid prescribing the medicine, Mitch Gold, Dendreon’s president
and chief executive officer, said in an interview.

“The launch of any new product is always difficult to
predict what it will look like,” Gold said. The company is
focusing on educating physicians on available reimbursement.
“When we look at our own numbers internally, they haven’t
shifted at all, in terms of what we think the peak sales
potential is.”

Dendreon yesterday reported August revenue of $22 million,
a 16 percent gain from July, and Gold said September sales
should continue to rise.

Approval in 2010

About 241,000 new cases of prostate cancer will be
diagnosed in the U.S. this year and an estimated 33,720
Americans will die of the disease, according to the National
Cancer Institute. Provenge was approved in April 2010 for
patients with advanced cases of the disease after the company’s
three-year effort to persuade the U.S. Food and Drug
Administration to clear the medicine for sale.

Dendreon’s restructuring, which will cost $21 million, will
enable the company to achieve a break even position in cash
flow, Dendreon said in its statement. The company also announced
the departure of chief operating officer Hans Bishop.

“Although management did not provide any specific timing
as to when this level of Provenge sales would be reached, in our
model, we now assume break-even in 2013 -– one year earlier than
previously anticipated,” Christopher Raymond, an analyst at
Robert W. Baird in Chicago, said today in a note to investors.